Despite the economic turbulence caused by the pandemic, a new survey by the Federal Reserve reveals a notable improvement in American family finances over recent years. Between 2019 and 2022, the average family's net worth soared by 37%, marking the largest three-year rise since the initiation of this survey over three decades ago. The data also hints at a slight narrowing of the wealth gap during this period, possibly driven by temporary government relief measures amid the pandemic. While median family income rose by 3% during the survey period, this increase was largely seen among the higher income brackets. The income analysis for 2021 revealed a mixed financial impact - over a quarter of families experienced significantly higher or lower incomes, correlating with job losses or enhanced wages and COVID-related bonuses. The 2022 survey showed stable debt levels since 2019, but families were better positioned to manage these debts, reflected in a drop in bankruptcy filings from 2% in 2019 to 1.3%. Homeownership saw a modest rise, with nearly two-thirds of families owning homes in 2022, contributing to the overall wealth increase. However, escalating home values have posed affordability challenges for potential new homeowners, as median home prices surged to over 4.5 times the median family income, exacerbated by persistently high home prices and climbing mortgage rates in 2022.
Photo Credit: Dmytro Demidko